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2018 (8) TMI 1032 - GUJARAT HIGH COURTSeeking company to register the transfer of 38, 04, 100 shares in favour of the petitioner bank - dispute about the title of the shares - This transfer was on the basis of an alleged pledge. - Company law board (CLB) dismissed the petition. Held that:- Considering the stand taken by the respondent no. 1 and the respondent no. 2 now, it appears that the impugned reasons not to transfer the share in favour of the appellant are that the respondent no. 2 Petrofils has gone in liquidation and that now there is a serious dispute with respect to whether the shares in question were pledged and put as security or not and that now the suit filed by the appellant herein is pending before the competent Court. Considering Section 111A( 2) of the Act visavis the principle of law laid down by the Hon'ble Supreme Court in the aforesaid decisions the shares of company are fully transferable, until and unless company is able to demonstrate sufficient cause to refuse such a transfer. Sufficient cause is not defined and therefore, has to be read in light of the decision of the Hon'ble Supreme Court referred to herein above. As observed herein above, on the basis of objection raised by the transferor, the same can be said to be “sufficient cause” not to transfer such freely transfer shares. In the present case, it is required to be noted that initially when the company refused to transfer the share in the name of appellant transferee in fact no objection at all were there by the respondent Petrofils. The respondent Petrofils lodged the objection only after the decision of the company not to transfer the shares in favour of the appellant transferee. It is also required to be noted that even thereafter also the respondent no. 1 did not refuse to register / transfer of share in the name of appellant on the ground that there are serious dispute with respect to title / pledge. The CLB in the impugned order rejected the appeal / application submitted by the appellant under Section 111A( 2) of the Act on the ground that the suit filed by the plaintiff is pending and there are serious dispute with respect to pledge and therefore, as such CLB gone beyond the reasons even given by the respondent no. 1 company. In view of the above and for the reasons stated above, impugned order made by the learned Company Law Board dated 26. 5. 2006 on Company Petition No. 37 of 2005 refusing to direct the respondent no. 1 company to register the transfer of shares in the name of appellant cannot be said to be sustained and same deserves to be quashed and set aside. Even the conduct / action on the part of the respondent no. 1 in retaining the original share certificate with it also deserves serious consideration. Learned counsel for the respondent no. 1 is not in a position to point out under which provision of law and how the company can retain the original share certificate assuming that company is justified in refusing to register the transfer of shares. Present appeal is allowed. - consequently respondent no. 1 is hereby directed to transfer the shares in question in favour of the appellant.
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